Growing Momentum for Change in Realtor Broker Compensation Models

Dating all the way back to the 1970s, there has been debate about the traditional compensation model for Real Estate agents, and the politics and laws surrounding the debate.

In the last few years, the expectation that technology would cause dramatic change to this long-standing model has been at the forefront of the debate. And in the last few weeks alone, there has been a lot of chatter and news about the debate as it stands currently, and some signs that changes are happening...

An extensive report is provided by the AEI-Brookings Joint Center for Regulatory Studies, and goes into much detail about some of the complaints voiced about the current model, as well as the challenges faced by those making an effort to change. Some are political, some economical, and some are logistical. It is not without flaws in my opinion, but does not claim to have all the answers either. Very much worth the read.

And then look at this special report from the Real Estate Journal about 'Careers in Real Estate'. 3 of the 6 articles in this report relate to flat fee sales, competition to the MLS, and a la carte models of paying for various Real Estate Transfer services. These are all concepts raised by the Joint Center study as well.

Last year there was a fantastic book written by Stephen Dubner and Steven Levitt called Freakonomics. The authors use economic principles to evaluate some interesting social dynamics, and devote one section to relating Real Estate Agents to the Ku Klux Klan. Needless to say, this is not a favorable write-up. More evidence of their distaste of Realtors exists on their blog.

There are some valid and well-composed arguments in all of these pieces. I also feel that each of them go too far at times. If the issue is of interest to you, give these a read. There are some new ideas out there. And if you are not so interested in this topic, you still should read Freakonomics. As a student of both Economics and Sociology, I have a particular fascination with it. But it is wildly entertaining; brilliantly thoughtful and explorative, and humorous as well.